As the Income Tax Return (ITR) filing for Assessment Year (AY) 2025–26 progresses, many taxpayers are facing unexpected delays in receiving their ITR refunds. This delay is primarily due to increased scrutiny by the Income Tax Department under Section 245, which allows the adjustment of refunds against any pending tax demands from previous years.
While the department aims to ensure compliance, this has led to administrative inefficiencies, frustrating honest taxpayers who have filed their returns promptly. With additional AI-based systems and ongoing technical challenges, refunds are being held up, leaving many wondering when their refunds will finally be processed.
ITR AY2025-26 Refund Delay
Filing your Income Tax Return (ITR) for Financial Year (FY) 2024-25 (Assessment Year 2025-26) is a critical step in ensuring compliance with India’s tax laws, but for many taxpayers, the wait for a refund can feel like an eternity. With over 1.05 crore ITRs filed and 95% verified as of July 8, 2025, the Income Tax Department has begun processing returns, but reports of refund delays are causing concern. A new rule under Section 245, which mandates reviewing past assessments before issuing refunds, has sparked debate among taxpayers and experts alike.
Why Are There Delays in ITR Refunds for AY 2025-26?
According to experts, Section 245 is one of the key reasons for the ITR refund delay. This section allows the ITD to adjust refunds against any outstanding tax demands or issues from previous years. Taxpayers with past mismatches, pending tax demands, or incomplete assessments will see their refunds held back until the department has resolved these issues.
This new approach has raised concerns among honest and salaried taxpayers who rely on timely refunds for financial planning and liquidity. Experts argue that holding refunds as a blanket policy, even for taxpayers with no outstanding issues, is unfair.
How Much Time Does It Take for an ITR Refund in AY 2025-26?
Typically, ITR refunds are processed within 30 to 60 days after the return is e-verified. However, the ITD's increased scrutiny and technical challenges are causing delays, particularly for cases flagged for manual review. With AI-based systems like Project Insight still in their infancy, small errors or discrepancies in the Annual Information Statement (AIS) or Taxpayer Information Summary (TIS) can result in further delays. The department has been taking additional time to resolve these issues, leading to a longer processing period for many taxpayers.
How to Check Your ITR Refund Status for AY 2025-26?
If you're wondering when your refund will be issued, here’s how you can check your ITR refund status:
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Income Tax e-Filing Portal:
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Visit the Income Tax e-Filing Portal.
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Log in using your PAN and password.
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Navigate to 'View Filed Returns' and select AY 2025–26.
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Check your refund status. If it says, "Return is under verification", your refund is on hold pending review.
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NSDL Refund Status Portal:
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You can also track your refund status using the NSDL Refund Status Portal.
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Enter your PAN and check the current status of your refund.
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What to Do If Your Refund Is Delayed?
If you notice that your refund is delayed, here’s what you can do:
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Ensure Your Details Are Correct: Double-check that your bank account details are correct and pre-validated on the e-filing portal.
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Track for Notices: Look out for any notices or communication from the ITD requesting additional information or clarification.
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File a Grievance: If your refund is delayed beyond the usual processing time (90 days), you can file a grievance through the e-filing portal or directly contact your Assessing Officer.
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Manual Errors: If there is a mismatch, file a revised return under Section 139(5) to rectify the errors.
While delays in ITR AY 2025-26 refunds are undoubtedly frustrating, they are largely due to the department’s increased scrutiny and technical challenges. If you’ve filed your return properly and there are no pending issues, the delay is likely due to the system’s inefficiencies rather than any fault of yours. Make sure to monitor the status regularly through the Income Tax e-Filing Portal and ensure that your details are up to date to avoid unnecessary delays.
FAQ
Question 1: What is causing the delay in ITR refunds for AY 2025-26?
Answer: The delay is mainly due to increased scrutiny under Section 245, where refunds are adjusted against pending tax demands from previous years.
Question 2: How much time does it typically take for ITR refunds in AY 2025-26?
Answer: ITR refunds are usually processed within 30 to 60 days after e-verification, but delays are happening due to additional scrutiny and technical issues.
Question 3: How can I check the status of my ITR refund for AY 2025-26?
Answer: You can check your refund status on the Income Tax e-Filing Portal or the NSDL Refund Status Portal by entering your PAN.
Question 4: What should I do if my ITR refund is delayed?
Answer: Ensure your bank details are correct, look for any notices from the ITD, and file a grievance or a revised return if necessary.
Question 5: Can AI-based systems cause delays in processing ITR refunds?
Answer: Yes, AI-based systems like Project Insight may flag legitimate refunds due to small errors, leading to further manual review and delays.
Disclaimer
The information provided in this article is for general informational purposes only and is based on the latest available data as of July 9, 2025. While every effort has been made to ensure the accuracy and completeness of the content, Income Tax Department procedures, regulations, and timelines may change at any time. The delay in ITR refunds discussed above may vary for each individual taxpayer based on their specific circumstances, and the processing times are subject to the Income Tax Department's internal procedures.
The author and website are not responsible for any actions taken based on the content provided. For the most accurate and updated information regarding your ITR filing and refund status, please refer directly to the Income Tax Department’s official website or consult a qualified tax professional.
